Let's keep our region moving by fixing TriMet's finances

View full sizeDoug Beghtel/The OregonianTriMet buses and MAX trains pick up passengers in downtown Portland along SW 5th Ave on May 11. TriMet is on a trajectory to spend more on health care than operations because of decisions made long ago.

By Cynthia Chilton

Without a doubt, TriMet's financial situation has reached a critical point. That was the conclusion reached by the 12 citizens serving on the TriMet general manager's budget task force. As described in our recently issued report, the long-term direction needed to assure TriMet's financial viability is now very clear to us: more reliable sources of operating revenue and lower labor costs.

We believe it is essential to diversify TriMet's revenue sources. Employer payroll taxes contribute about half of TriMet's operating funds. This heavy reliance on the payroll tax for operating funds leaves TriMet service levels and annual budgets vulnerable to volatility in the local economy. During the current economic downturn, when many citizens became increasingly dependent on transit, TriMet has had to cut service and increase fares in order to balance the budget. A slow recovery will prolong this hardship.

A better mix of funding sources could help TriMet maintain more stable service levels during recessions and make investment decisions with more certainty of annual operating fund levels. Securing more diverse funding will require a long-term strategy and commitment from key parties at the local, state and federal levels. In the near term, however, TriMet's immediate priority should be addressing its labor costs.

TriMet must contain present and future health care costs by bringing union benefits in line with regional and industry norms. Labor costs -- specifically wages and benefits -- are a common challenge in the transit industry, but TriMet's costs are some of the highest nationwide. Collective bargaining is further hampered by the current "winner-takes-all" arbitration requirements that inhibit productive negotiations. Without greater control over labor costs, TriMet will not have a sustainable financial future.

TriMet health benefit costs are currently 15 percent of the total operating requirements and absorb 26 percent of payroll tax revenue. The national cost crisis in health care is affecting all employers, but TriMet has been slower than most to recognize and address it. As a result, TriMet union health benefits now far exceed those of both public and private employers. Without benefit and eligibility changes, by 2020 TriMet will be paying more than 50 percent of its underlying payroll tax in health benefits for active and retired union employees.

Under current Oregon collective bargaining law, TriMet is limited to many years of two- or three-year contracts with only modest changes before reaching parity with the market for wages and health care. Union negotiations are very difficult because it is in the union's interest not to settle but instead to go to arbitration, where typically only modest incremental proposals are considered. TriMet's 2003 union contract expired two years ago, but TriMet and the ATU have yet to agree to terms. For the past 20 months under new leadership, TriMet has tried through negotiations to address the labor health cost issue, as well as wages and outdated work rules. However, negotiations reached an impasse, and the parties are now in arbitration.

Transit service is vital to our community and our economy. It gets people to work, school and play; it creates jobs and eases the flow of goods and services; and it supports our region's quality of life. So it's incumbent on us to map a financially viable future for TriMet. The community at large needs to understand what's at stake. Together we must find the resolve to address these threats to TriMet's future in an equitable yet determined manner. Our community deserves nothing less. Cynthia Chilton is chair of the TriMet general manager's budget task force.